Real pay grows at fastest rate in two years as UK earnings outstrip inflation

Average earnings, excluding bonuses, rose by 7.7 per cent in the three months to September

Food inflation in the UK slowed to 8.8 per cent in October, from September’s 9.9 per cent. AFP
Powered by automated translation

Real pay in the UK is growing at the fastest rate in about two years, as earnings outstrip inflation, new figures show.

Data from the Office for National Statistics showed that average regular earnings, excluding bonuses, rose by 7.7 per cent in the three months to September.

That was down from a record high of 7.9 per cent in the previous three months.

“That is still reasonably strong growth,” Darren Morgan, head of economic statistics at ONS, told Radio 4’s Today show.

“And with inflation easing that means real pay, so after you take into account of the price rises that people face, that is growing by 1.3 per cent and that is the highest growth in real pay for around two years.”

Ben Harrison, director of the Work Foundation at Lancaster University, a think tank for improving working conditions in the UK, said people "shouldn’t get carried away".

“Real pay growth may be at its highest level for two years, but regular wages have only risen by 1.3 per cent on the year.

"Insecure and low paid workers are still struggling to make ends meet – our recent research with the Chartered Management Institute shows almost half of insecure workers couldn’t pay an unexpected bill of £300 if it was due within the next seven days."

The unemployment rate remained unchanged at 4.2 per cent in the third quarter.

“And that means there were also virtually the same number of people economically inactive, so 8.7 million people out of work but not looking for work or available for work,” said Mr Morgan.

But more cracks are appearing in the jobs sector, with vacancies falling to the lowest level for more than two years, down 58,000 quarter-on-quarter at 957,000.

Figures released at the end of last month showed shop price inflation has dropped to its lowest rate since August 2022.

Easing for the fifth consecutive month, prices were 5.2 per cent higher in October than a year earlier, down from September’s 6.2 per cent, according to the British Retail Consortium-Nielsen Shop Price Index.

Food inflation also slowed, to 8.8 per cent from September’s 9.9 per cent – its sixth consecutive deceleration and lowest rate since July – while fresh food inflation decreased even further to 8.3 per cent, down from 9.6 per cent a month earlier.

Inflation on non-food items fell to 3.4 per cent from 4.4 per cent, its lowest rate since September 2022.

Updated: November 14, 2023, 12:29 PM